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Trends That Matter in Transportation Procurement

April 30, 2013
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Unpredictable economic forces of today are impacting global businesses, ranging from macro-economic trends to technology innovations, and keeping transportation procurement practitioners on their toes. Here are some trends and tips to help transportation procurement professionals mitigate and manage some of the industry’s volatility.

Transportation procurement slated for growth as globalization continues to expand.
Supply chain globalization has compounded vulnerability and risk, which isn’t necessarily new, but it’s ever more apparent in the recent wake of several notable supply chain glitches from global brands. Transportation professionals know (and some have used procurement to help mitigate) new practicalities such as a natural disaster in one region of the globe can impact activities thousands of miles away. Near term prospective global infrastructure additions will provide a new wave of cost and service opportunities in certain geographies, and will dynamically influence the logistic capacity allocation ratio.

Now is the ideal time for procurement to reap the benefits from investments in “Trusted Partner” stakeholder relationships
Procurement practitioners with regular stakeholder communication are better equipped to negotiate favorable spot opportunities in the marketplace. As stakeholders struggle to adapt to a changing marketplace, inbound and outbound transportation opportunities can be exploited to create awareness, scale, leverage and visibility.

The right technology and tools have never mattered more.
Companies that have invested in transportation management technology are now seeing significant ROI compared to companies that deflected such investments. Transportation managers are praising the marketplace for improvements in vertical visibility into their own network. But the lack of horizontal visibility into other provider networks often leaves cost/value opportunity untapped. Best-in-class TMS tools are yielding comparatively material ROIs and likely will for the next three-to-five years, according to Xchanging research. Further, a recent RedPrairie survey noted the typical 12-month ROI is about 100 percent after proper implementation and configuration.

The uneven recovery of the U.S. and global economies is creating cost and service opportunities.
Capacity levels in the U.S. and, to a lesser extent, the global marketplace, are more volatile today than at any point prior to the recent recession. Static capacity channels supporting industries like defense are experiencing pronounced reductions, while others supporting energy production are experiencing shortages and constraints. As such, transportation buyers are reacting to dramatic price and service offering variances between different regions. Buyers relying on sector-specific transportation supplier relationships are going to be less successful than their counterparts with multiple business partnerships. While they may be more complex to manage, diversified relationships are a hedge in uneven times.

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